Coming up: Over 100,000 housing units

Nearly half of new private properties unsold; HDB to launch 6,400 flats too

By Rachel Chang, The Straits Times, 30 Oct 2012

THE number of new private properties in the pipeline has ballooned to more than 100,000 units at the end of the third quarter, said the Urban Redevelopment Authority (URA) yesterday.

The news may bring cheer to buyers concerned about the persistent uptick in prices but dismay to those who had bought for investment or leasing purposes.

The upcoming private home supply comprises 83,975 private residential units, 9,824 executive condominiums and 10,070 units from land sites that the Government has sold, or that are slated for sale. This is the highest-ever total recorded since data was collected in 2001.

The URA said many of the units will be completed in the next three or four years. More than 35,000 units will be ready next year and in 2014, with the rest completed after that.

More than 36,000 private residential units or about 44 per cent of the upcoming supply remain unsold. Developers have some leeway to hold back units, but not much. A cooling measure last year requires that they build and sell residential units within five years or face a 10 per cent stamp duty.

In addition, the Housing Board (HDB) announced yesterday it will roll out another 6,400 Build-To-Order flats next month in Bedok, Choa Chu Kang, Queenstown, Sengkang and Toa Payoh, bringing its crop of new flats this year to the promised 27,000 - also a record high.

"Taken altogether, the numbers do look daunting," said Colliers' director of research and advisory Chia Siew Chuin. "The ramping up of supply is to keep prices stable but there is some concern whether this is tantamount to oversupply."

The hefty numbers, combined with the Government's move to slow the influx of foreign labour, will likely hit the rental market the hardest in the coming years, said analysts.

The vacancy rate of completed private residential units has increased slightly to 6.1 per cent in the third quarter from 5.9 per cent the quarter before, said the URA.

Low interest rates will sustain buying momentum but "if interest rates shoot up, there will be a glut everywhere", said ERA Realty key executive officer Eugene Lim.

For now, buyers seem undeterred and willing to pay. Private home prices rose 0.6 per cent in the third quarter, up from 0.4 per cent in the second quarter. The HDB's resale price index climbed 2 per cent, up from 1.3 per cent in the second quarter.

Developers sold more private units in the third quarter - 5,916, up from 5,402 in the second quarter - despite launching 20 per cent fewer properties.

As has been the case since cooling measures brought the number of foreign buyers down, demand in the third quarter was driven by mass-market homes in the suburbs. About 74 per cent of the units sold by developers were in the outside central region, which saw prices rise 1 per cent, compared to the 0.1 per cent uptick in the core central region.

Shoebox units accounted for 16 per cent of all sales in the quarter, less than the 19 per cent in the previous quarter, said the URA.

In the HDB resale market, analysts said a bottleneck in the supply of flats is sustaining price inflation. Resale transactions fell by 6 per cent to 6,560 cases in the third quarter.

More HDB upgraders are holding on to their flats when they buy a private home, preferring to lease them out rather than release them into the resale market, they said, in the belief that they can make money from rental yield, and sell for a higher price later.

According to the HDB, the number of flats approved for sub-letting grew to 42,920 in the third quarter. They form about 4.5 per cent of the total stock of flats.